Four bonds are trading in the market. Bonds make semiannual coupon payments. For zero coupon bonds (for this question) use semiannual discounting.

Maturity Coupon rate

A 8 3%

B 4 3%

C 8 0

D 4 0

a. What are the bond prices if yields to maturity for all maturities are 3%?

b. What are the bond prices if yields to maturity for all maturities are 4%?

c. What are the percent changes in the bond prices?

d. Briefly discuss.